How to Invest During Volatile Markets (such as the 1987 stock market crash)

Investing is easy when markets are calm and steadily rising. But what happens when everything feels like it’s falling apart?

Sudden market drops, scary headlines, and economic uncertainty can rattle even seasoned investors. If you’ve ever felt like pulling all your money out when the market dips—or maybe you already have—you’re not alone.

But here’s the good news: Volatility doesn’t have to derail your investing journey. In fact, with the right mindset and strategy, it can even become an opportunity.

Let’s dive into how you can invest wisely during volatile markets—and come out stronger on the other side.

The 1987 stock market crash

In the short term, markets fluctuate. That’s just part of the deal. But in the long run, they’ve always trended upward.

Even the stock market crash of 1987 recovered to previous highs in less than two years!

Just look at the history of the stock market: despite wars, recessions, pandemics, and political drama, long-term investors have eventually seen positive returns.

Action Tip: Ask yourself: Will this matter in 5 years? If not, don’t let it sway your long-term strategy.

Stick to a Strategy (or Reassess it Wisely)

Volatility is the ultimate test of your investment plan. If you’re feeling panicked, your portfolio might not match your risk tolerance, or you may not have a plan at all.

A good strategy isn’t built for the best days. It’s built to survive the worst ones.

Key strategies to consider:

• Dollar-cost averaging: Invest a set amount regularly. It smooths out the highs and lows.

• Diversification: Spread your investments across different asset classes (stocks, bonds, real estate, etc.).

• Core & explore: Keep a stable core portfolio and use a small portion to invest in riskier or opportunistic plays.

  
  

Don’t Try to Time the Market

Trying to time the market based on price is very challenging, and even he most astute investors can get caught out trying to accomplish this. Resulting in selling low and buying high, which is the opposite of making money.

A better approach is to understand the economic environment and position your investments to have the best opportunity for return over the long term.

Turn Volatility Into Opportunity

With a good investing strategy, money can be made both when the market falls and when it rises. The key is preparing early. All our investments should be in place before the market declines to capture the downward momentum.

This begs the question: How do we know when the market will decline?

It's impossible to know for certain EVERY time, however, luckily, we don't need to know for certain, we only need to be correct more often than not to make a lot of money. Two economic indicators help us determine the future health of any economy.

1. Inflation increases- The Federal Reserve will increase interest rates to keep inflation under control, which makes mortgages more expensive which resulting in less spending on other things

2. Unemployment increases - when people are unemployed, they can't spend,

Economic statistics as of 9 April 2025

If spending goes down across the country, then profits for businesses will also decrease, resulting in lower share prices (stock market declines).

These two metrics are important because they are the key metrics the Federal Reserve monitors to set monetary policy. Which ultimately drives the economy to speed up or slow down. And wherever the economy goes, the stock market eventually follows.

Preparing for a decline

The best way to profit from a bear market is to prepare for one ahead of time. Let's look at how to do this:

Preparing our portfolio

• Invest only in assets that cannot functionally go to zero (e.g. index funds, gold, etc)

• Buy uncorrelated investments so that if one goes down, the other goes up, protecting the portfolio from a complete collapse. See the investing guide on how this works.

So as the market declines, other investments increase or retain their value. This provides us with purchasing power to deploy as the market declines.

Keep Emotions in Check

Markets move on emotion—fear and greed. The best antidote to keeping emotions in check is to have a solid game plan. After all, why would I panic if I already predicted what would happen?

Put our strategy in place before any major market movements, then just like a sports team would play many practice matches before the World Cup, so too, as investors, we need to practice and refine our strategy so that when that eventual market crash arrives, there is no emotion, we've played it many times before, then our execution can be flawless!

Investing as a sport

We can outmaneuver the market because we know every play and can even pre-plan our positions.

Ways to play the game

When the market movement increases dramatically, there are two approaches we teach our members.

Passive

Creating an 'all-weather' portfolio that is well-balanced can reduce the volatility in our investments with very little involvement, still providing a good long-term return.

Volatility might throw the portfolio out of alignment temporarily. For example, if stocks drop, they might make up a smaller part of your overall mix than you intended. Selling other investments that have done well and buying stocks brings the portfolio back into balance, automatically helping you “buy low and sell high.”

Active

This is for investors who want to take a more active role in the returns of their investments. Using a simplified approach, we apply advanced investing techniques to maximize the outcome in our portfolio. Resulting in outsized returns that grow exponentially over the long term.

Learn more about our next program

Protect What Matters Most

If you’re near retirement or have short-term goals, make sure you’re not relying too heavily on volatile assets.

Your investment strategy should match your timeline. Money you need in the next 1–3 years shouldn’t be in high-risk investments.

Seek out your local financial adviser to help guide you on the best decisions for your specific financial circumstances.

Final Thoughts: Stay Calm and Keep Investing

Volatile markets can be uncomfortable, but they’re also part of the journey. If you stay disciplined, think long-term, and stick to a solid strategy, you’ll not only survive the volatility—this is where you can make some of the best returns!

Remember: Every market dip in history has eventually led to a recovery. Your job is to make sure you're still in the game when that happens.

Want to Invest Smarter?

Download our free 5-Step Investing Guide and learn how to build an investment strategy that works—no matter what the markets are doing.